A Brexit would favour expatriate mortgagors because more lenders would stay in the market, Offshoreonline has predicted.
A Brexit would favour expatriate mortgagors because more lenders would stay in the market, Offshoreonline has predicted.
The European Union’s Mortgage Credit Directive, which has its final implementation date next Monday, has already caused two building societies including The Dudley to pull out of expatriate mortgage lending.
MCD rules stipulate that lenders offering foreign currency loans have to disclose where there is a fluctuation in exchange rates of more than 20%. This will trigger an obligation to offer borrowers the option of switching a loan denominated in a foreign currency into sterling.
Guy Stephenson, a spokesman for Offshoreonline.org, said: “New rules are acting as a dampener for competition and freedom of choice.
“Compliance is a huge cost for UK banks and building societies and EU directives are a significant part of this.
“The larger banks can absorb changes to the regulations with relative ease, but for smaller building societies trying to develop specialist lending niches, such as expat mortgages, the challenges can be significant.”
Offshoreonline said one small society has managed to implement the new rules, but two have ruled out expatriate lending.
A number of large lenders have pulled out of offering mortgages in a foreign currency because of MCD including Lloyds and Nationwide.
Despite the influence of the MCD Stephenson noted that lenders abroad see the 20% currency shift as less of an issue and have indicated they will continue lending to expats.
